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School boards, communities divided on keeping surpluses

Should school districts be permitted to keep a percentage of surplus funds each year? Local budget committees around the state are divided.

A state law passed in August allows school districts to retain year-end unassigned general funds in an amount not to exceed 2.5 percent of the current fiscal year's net town tax assessment. The money can only be used to help offset the tax rate, or in an emergency, with restrictions and oversight from the local budget committee and the state commissioner of education.

Schools can only keep the funds if voters agree first.

In most communities, some or all of that fund balance - which can total hundreds of thousands of dollars - is returned to the town at the end of the year.

Many school boards, including those in Raymond, Hampstead and Candia, put the article on their warrants this year, but their respective budget committees did not approve.

Some communities, including Bedford and Auburn, chose not to put the issue before voters at all.

In many communities, both the school board and budget committee have recommended the article and it has drawn little discussion at deliberative sessions.

Barrington Budget Committee Chairman Doug Langdon said the committee's rationale for recommending the article was to give the school district some flexibility should an emergency arise.

"Hopefully it gives the school some capability to cope and manage with emergencies rather than having it come back to taxpayers for special meeting, for example, or back to the taxpayers for an increased amount in next year's budget," Langdon said.

Ron Brickett, business administrator for the Raymond School District, said state revenues in particular are a concern, with the distribution of adequacy grants changing and no guarantee on revenue streams like catastrophic aid.

Brickett said if there is a revenue shortfall one year, funds can be taken from the surplus account, if established, to bring revenues up to the budgeted amount without approval of the budget committee or the state commissioner of education.

But if the school board wants to use the funds for an emergency expenditure that will push the budget over what voters approved, it has to be approved by the budget committee and the commissioner.

In Farmington, the budget committee recommended putting the article on the warrant, but Chairman Brian St. Onge said he does not think it is needed.

He said questions posed at deliberative session about the article included whether the fund was cumulative (it is not) and whether the money can be expended "willy-nilly" (it cannot).

"But it was not an extremely controversial measure," St. Onge said.

In the Kearsage School District, per the district's charter, the article was voted on during the Jan. 5 deliberative session and passed by a vote of 80-1 with little discussion, according to meeting minutes.

During Deerfield's school deliberative session Feb. 11, several voters inquired as to the purpose of the fund and how it could be used to reduce taxes.

Deerfield School Board Chairman Donald Gorman said despite school board attempts to explain the article, voters still seemed confused when they left the meeting.

The Auburn School Board opted not to put an article on its warrant this year. Chairman Kathleen Porter said this is the first year since Auburn became an SB2 town that the default budget is lower than the proposed operating budget.

"We just knew that setting aside more money at the end was not a service to our taxpayers," Porter said.

They are already asking that $25,000 of any surplus be set aside in the construction trust fund, and did not think asking for any more than that was prudent.

"We felt that returning as much as we could to offset the tax rate at the end of the fiscal year was better than setting it aside, this year especially," Porter said.

The article will appear on dozens of ballots throughout the state when the polls open for local elections March 12.

New Hampshire Union Leader Correspondents Brendan Clogston, John Quinn, Sara Young-Knox and Melanie Plenda, Special to the Union Leader, contributed to this report.

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